One_pager_Uzbekistan Auto Industry: Sources of Growth Outside the Sec r11_automobile industry in uzbekistan_eng_2 | Page 3

Figure 3. A high level of technological sophistication means
that, all other factors being equal, this sector makes a bigger
contribution to the processes of structural transformation than
others, PRODY, USD 4
Figure 4. Having established its own niche in export markets, the
industry is forming a market inside the country for other sectors, %
Motor vehicles
0
5000
10000 15000 20000 25000
•
An important area in the glass industry is the construction
of a plant to manufacture flat sheet glass, which is widely
used in the auto industry;
• A promising area in the chemical industry is the manufacture
of polypropylene, which has broad applications in the
auto industry. Tire production should be localized for the
industrial-rubber sector.
Greater cooperation with manufacturers of components
and materials for the auto industry will become the basis for
increasing indirect benefits and the multiplier coefficient.
3. In order to successfully confront current and future threats, it
is essential to step up the localization of production of high-
tech modules and components for motor vehicles, diversify
the participation of transnational corporations in added-
value chains and significantly expand both the assortment
and geography of exports. On the one hand, the benefit from
investments in auto-assembly production can be realized
only if this new sector develops a demand for the products
of Uzbek enterprises. On the other, the production of spare
parts, modules and pre-assembled units is less susceptible to
changes in specific markets.
4. The development of Uzbekistan’s own engineering
and R&D capability is an essential condition for realizing
the potential of intersectoral cooperation. The R&D sector
should initially be developed at the laboratory attached to
the local branch of Turin Polytechnic University, which must
be encouraged to realize the potential of R&D not only for the
automobile complex but in other, allied sectors as well.
5. Achieving the objective of increasing the indirect benefits
from the automaking sector also requires reform of the
administrative system in the industry. Specifically, the current
model, in which the majority of auto-complex enterprises are
subsidiaries of the auto industry, does not create sufficient
incentives for these enterprises to introduce innovations
and expand and diversify their products. In order to create
the necessary incentives and, therefore, favorable conditions
for the development of allied sectors, a system should be
created in which these enterprises will have a large measure
of autonomy and the auto industry will be able to choose its
contractors (e.g. on the basis of competitive bidding).
Implementation of these measures:
• will help ensure the sustainability of high rates of growth
– at least 8% a year; more intensive processing of local raw
materials, the generation of demand for products of allied
sectors and the concomitant development and expansion
Center for Economic Research
5, 1 st blind alley, Usmon Nosir str.
Tashkent 100070, Uzbekistan
Tel: [phone],
281-45-56/57/58/59;
Fax: [phone]
www.cer.uz
•
•
•
Farm machinery
Polyethylene
Mineral fertilizers
8
7
6
5
4
3
2
1
0
Power transformers
of key sectors as drivers will become an important factor
in the structural transformation of the economy;
involves the development of production facilities in various
parts of the country. Hence the development of the auto
industry will promote more uniform spatial development
and a reduction of regional imbalances;
will contribute to the creation of productive jobs, to an
improvement in the quality of human capital and to an
acceleration of the processes of social transformation,
considering that the key sectors are mostly processing
industries;
will contribute to the diversification of the country’s
economy, thereby creating the foundations for long-term
sustainability and stability.
The data in the first quadrant of the input-output matrix for Uzbekistan
that is used to calculate the multipliers includes import data. Data that
excludes imports could provide a more accurate picture.
2
The following have a comparative advantage: in the auto industry, motor
vehicles; in the chemical industry, polyethylene and mineral fertilizers; in
machine building, farm machinery and power transformers. .
3
The multiplier for the auto industry shows how much production
increases in other sectors if production in the auto industry increases by
UZS 1.
4
PRODY is an index of the technological sophistication of a good,
calculated as the weighted average real income per capita of countries
exporting that good with a comparative advantage. The higher the
index, the greater the technological sophistication, since this means that
the good is exported by countries that have a high per capita income.
1
The Center for Economic Research is jointly supported by the United Nations
Development Programme (UNDP) and the Government of Uzbekistan
The views and opinions expressed in this material do not necessarily reflect the official positions of the
Center for Economic Research or the United Nations Development Programme.
UNDP Country Office in Uzbekistan
4, Taras Shevchenko str.
Tashkent 100029, Uzbekistan
Tel: [phone];
Fax: [phone]
www.undp.uz